ACG 4101 FINAL CH 1-7 EXAM QUESTIONS
WITH CORRECT ANSWERS
Describe relevance - CORRECT ANSWER✔✔-information has predictive
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or confirmatory value. Financial info. is material if omitting or misstating
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could could affect users' decisions
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faithful represenation - CORRECT ANSWER✔✔-when there is an
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agreement between the a measure or description and the phenomenon
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|it purports to represent; enhanced by neutrality, completeness, and
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free from error.
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comparability - CORRECT ANSWER✔✔-the ability of users to see
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similarities and differences between two different business activities
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consistency - CORRECT ANSWER✔✔-same practices being used over
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time to permit valid comparisons between reporting periods
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when are adjusting entries necessary - CORRECT ANSWER✔✔-for
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prepayments (deferrals), accruals (accrued liabilities, accrued
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receivables), estimates |
, prepayments - CORRECT ANSWER✔✔-the cash flow precedes either
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expense or revenue recognition.
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accruals - CORRECT ANSWER✔✔-involves cash flows that occur after
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either expense or revenue recognition
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example of accrued liability - CORRECT ANSWER✔✔-salaries payable
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what happens if accrued receivable is not recorded - CORRECT
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ANSWER✔✔-net income, assets, and SE will be understated | | | | | | |
the adjusting entry to record accrued expense includes: - CORRECT
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ANSWER✔✔-a credit to a liability | | | |
reversing entries - CORRECT ANSWER✔✔-made to adjust revenues and
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expenses at the end of the accounting period when revenue and
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expenses are initially recorded upon payment of cash
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consequence of failure to accrue an expense/ revenue - CORRECT
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ANSWER✔✔-if you do not accrue an expense, you will overstate your
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income
when you accrue an expense, the other side is a liability - so if you do
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not accrue an expense, you understate an expense and a liability
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WITH CORRECT ANSWERS
Describe relevance - CORRECT ANSWER✔✔-information has predictive
| | | | | | |
or confirmatory value. Financial info. is material if omitting or misstating
| | | | | | | | | |
could could affect users' decisions
| | | | |
faithful represenation - CORRECT ANSWER✔✔-when there is an
| | | | | | | |
agreement between the a measure or description and the phenomenon
| | | | | | | | |
|it purports to represent; enhanced by neutrality, completeness, and
| | | | | | | | |
free from error.
| |
comparability - CORRECT ANSWER✔✔-the ability of users to see
| | | | | | | | |
similarities and differences between two different business activities
| | | | | | |
consistency - CORRECT ANSWER✔✔-same practices being used over
| | | | | | | |
time to permit valid comparisons between reporting periods
| | | | | | |
when are adjusting entries necessary - CORRECT ANSWER✔✔-for
| | | | | | | |
prepayments (deferrals), accruals (accrued liabilities, accrued
| | | | | |
receivables), estimates |
, prepayments - CORRECT ANSWER✔✔-the cash flow precedes either
| | | | | | | |
expense or revenue recognition.
| | |
accruals - CORRECT ANSWER✔✔-involves cash flows that occur after
| | | | | | | | |
either expense or revenue recognition
| | | |
example of accrued liability - CORRECT ANSWER✔✔-salaries payable
| | | | | | |
what happens if accrued receivable is not recorded - CORRECT
| | | | | | | | | |
ANSWER✔✔-net income, assets, and SE will be understated | | | | | | |
the adjusting entry to record accrued expense includes: - CORRECT
| | | | | | | | | |
ANSWER✔✔-a credit to a liability | | | |
reversing entries - CORRECT ANSWER✔✔-made to adjust revenues and
| | | | | | | | |
expenses at the end of the accounting period when revenue and
| | | | | | | | | | |
expenses are initially recorded upon payment of cash
| | | | | | |
consequence of failure to accrue an expense/ revenue - CORRECT
| | | | | | | | | |
ANSWER✔✔-if you do not accrue an expense, you will overstate your
| | | | | | | | | | |
income
when you accrue an expense, the other side is a liability - so if you do
| | | | | | | | | | | | | | | |
not accrue an expense, you understate an expense and a liability
| | | | | | | | | |
